\tWith all the ingenuity in the Canadian financial services industry, who would have thought that planning firms would look to restaurant chains for a compensation model?<\/p>\n
\tPFSL Investments Canada Ltd.<\/b>‘s “tip jar” approach to compensation has won accolades and followers. Senior reps at PFSL gave their firm the highest score (9.2) for compensation in the 2005 Planners’ Report Card, just edging out last year’s winner, Markham, Ont.-based FundEx Investments Inc.<\/b><\/p>\n
\tIf you’re not familiar with the tip-jar model, here’s how it works: during a restaurant shift, all tips received by staff go into a jar and, at the end of the shift, the money is counted; management takes a 25% cut and the remaining 75% is divided among employees, according to seniority and starting with the cooks. Long-time employees, who may have brought in a handful of strong recruits over the years, get the highest cut from the tip jar.<\/p>\n
\tThe same goes for Mississauga, Ont.-based PFSL’s commission structure.
\t“The guy who sold the product may be a division leader,” says Jeff Dumanski, executive vice president of marketing at PFSL. “So he may receive 25% of the 75% that is split among the field.”<\/p>\n
\tAlthough somewhat stretched, the comparison is worth making because the same kind of enthusiasm that gets employees singing “Happy Birthday” to customers in restaurants seems to pervade PFSL. “No other firm seems to understand the impact of override commissions and building distribution the way we do,” says a PFSL advisor in Ontario.<\/p>\n
\tIn fact, dozens of lower-paid, less vocal PFSL reps may hive around a single PFSL office in which a highly paid executive vice president leases the office space, the photocopier and phones, and pays for other business costs. Reps pay for marketing and sales material, says Dumanski, but the firm pays for provincial licensing fees and the forms needed to do business.<\/p>\n
\tW.H. Stuart & Associates<\/b> has developed a variation of the worker-bee theme. The Unionville, Ont.-based firm offers a classic grid compensation structure but, starting this year, is touting the value of its “agency builder” platform, modelled on its U.S.
\tstructure. “It was with us all the time,” says Dino DeRosa, chief compliance officer, “But we never really publicized it.”<\/p>\n
\tSimilar to that of PFSL, this structure allows an advisor to build a team of salespeople who do business from a senior planner’s office. All compensation flows through head office and is redistributed to the senior rep on the platform.<\/p>\n
\t“Some reps, that’s what they do,” says DeRosa. “And this will help them with residual income throughout their lives, as long as they keep their mutual fund licences.”<\/p>\n
\tOn the other hand, Markham, Ont.-based FundEx \u2014 the other firm with a high score for compensation \u2014 controls none of the commission distribution, simply giving 100% of it to the planner in exchange for a flat $18,000 annual fee that pays for back office, provincial registration and compliance services. David Vowles, president and CEO of FundEX, says the company is defined by “freedom and autonomy” and doesn’t offer any sales or marketing support. “[Advisors] have to pay for their office space, their computer supplies \u2014 all of it,” he says.<\/p>\n
\tThe message from FundEx planners \u2014 who tend to be well established \u2014 seems to be that if you can manage the compensation structure, you’ll like it. Advisors at the firm give it a score of 9.1 \u2014 a dip from last year’s near-perfect score, possibly because of grumbling over a rise in the flat fee.<\/p>\n
\tThe remainder of the firms surveyed are ensconced in various versions of the grid system or flat-fee hybrids defined partly by their back-office systems. Winnipeg-based IQON Financial Inc.<\/b> has managed to combine everything from GIC sales, insurance and mutual fund grids into one system, which is rare.<\/p>\n
\tPlanners across the country are generally happy with their compensation, rating their firms a collective 7.8, slightly higher than last year’s national score.<\/p>\n
\t“Grids are sacred,” says Chris Reynolds, president of Mississauga, Ont.-based Investment Planning Counsel.<\/b> “We tend not to make any changes. We may change the value proposition, but we never try to change the structure. Our reps say no news is good news.”<\/p>\n
\tActually, two grids influence payout. If you’re at a firm that prefers the branch system, a grid sends as much as 85% of commissions back to your branch, depending on production levels. At some firms, planners are compensated at the branch level on yet another grid according to asset level and the types of services used.
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